A MARTÍNEZ, HOST:
The U.S. and Israeli war on Iran is paused as part of a shaky ceasefire, but the conflict and the blockade of fuel shipments through the Strait of Hormuz is putting a strain on global markets.
MICHEL MARTIN, HOST:
The International Monetary Fund says the global economy is now at risk of recession, and it has singled out the United Kingdom as being hit the hardest.
MARTÍNEZ: That's where we find NPR's Fatima Al-Kassab in London. So what does the IMF say about the results of this war and the reaction in Britain?
FATIMA AL-KASSAB, BYLINE: Yeah. So the IMF issued a stark forecast for the global economy yesterday, and it's not looking good. It's especially not looking good for the U.K. because it imports so much of its gas and oil. Here in the U.K., households will already be $500 worse off this year due to the war. That's according to a leading think tank, the Resolution Foundation. Britain's finance minister, Rachel Reeves, called the U.S. and Israel's war in Iran a folly. She was speaking to The Mirror newspaper in what is the strongest criticism from a British government minister of Trump's war yet.
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RACHEL REEVES: I feel very frustrated and angry that the U.S. went into this war without a clear exit plan, without a clear idea of what they were trying to achieve.
AL-KASSAB: Treasury Secretary Scott Bessent acknowledged yesterday that U.S. allies were going to suffer some economic pain, but he said it was worth it to prevent Iran from getting nuclear weapons. He told the BBC, quote, "I wonder what the hit to global GDP would be if a nuclear weapon hit London."
MARTÍNEZ: Wow. Now, governments around the world are really scrambling to try and ease the impact. And you've been reporting on Ireland. Tell us about the steps that the government has taken there.
AL-KASSAB: Yeah. That's right. In Ireland, the government announced more than $500 million in tax cuts on motor fuel. That came after a week of protests over high fuel prices, which brought many parts of the country to a standstill. Yesterday, the Irish government survived a no-confidence vote, which was brought over their handling of the crisis. But it's just an example of the political pressure on governments around Europe. These fuel protests have been going on in the Republic of Ireland for days. They're now spreading north of the border to Northern Ireland, which is part of the U.K., where farmers have been holding tractor protests. So it really does look like they are catching on.
MARTÍNEZ: Oh, OK. Now, what about the rest of Europe?
AL-KASSAB: Yeah. In Norway, truck drivers descended on the capital and took part in a diesel roar protest. Germany's government has cut fuel tax in a package worth more than a billion dollars. That's to help people with the rising costs. I spoke to Vicky Pryce. She's an economist who advised the British government during the 2008 financial crash. She says the fuel protests in Ireland are a sign of what's to come elsewhere.
VICKY PRYCE: If the governments don't respond, if the situation continues as it is, that is likely, therefore, to lead to farmers and others protesting again.
AL-KASSAB: She also said the impact is being felt most in low- and middle-income countries. A national emergency has been called in the Philippines due to a lack of energy supply. There are shortages of cooking gas in India. Farmers in South Asia are dealing with a lack of fertilizer, and there are warnings that this could all lead to a global food crisis.
MARTÍNEZ: Let's say the Strait of Hormuz reopens today and the U.S.-Iran ceasefire holds. Will all of this turmoil just go away?
AL-KASSAB: Well, some analysts are saying, you know, even if peace is declared tomorrow, there's already been such a shock that's been embedded in the system that it may take weeks or months to overcome. Now, there's a lot of uncertainty here. The IMF came up with varying scenarios and different outcomes for the global economy based on how long this war goes on. But they say that for now, the global economy is threatened with being thrown off course.
MARTÍNEZ: That's NPR's Fatima Al-Kassab in London. Thank you very much.
AL-KASSAB: Thanks, A. Transcript provided by NPR, Copyright NPR.
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